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The Bait-and-Switch
Some mortgage brokers want to lure you shoppers with low rates
that they have no intention of honoring. After you
have gone through the hassle of giving them all of your
documentation, they might say that you don't qualify for
the rate. At that point, you might already feel committed and
just decide to accept the new rate rather than starting again
with another broker.
Hidden Closing Fees
If you start the loan process with a broker, you should
receive a Good Faith Estimate of the closing costs within
a few days. The problem is that these are just estimates, and you might
find that at the last minute, right when you are about
to close on a home purchase, the closing costs are much
higher than estimated. They might figure that since you are
under pressure to close escrow, you might feel to just go
along with it, or you might just forget the original estimate.
"Forgetting" to Lock the Rate
When you start the loan process, you should be able to
lock the rate for a certain amount of time (usually
30-60 days). Some brokers may "forget" to do this, and
then if prices go up, they will inform you of the increased
rate. Again, they think that if you are far along into your
deal, you might just go with it just to finish the deal.
You can protect against this by asking the broker for a
loan commitment letter when you start your application.
Finding a Reputable Lender/Broker
Given all the potential pitfalls associated with finding
a loan, it is very important to find a broker/lender you
can trust. So how do you go about it?
One of the easiest ways is to search the big customer complaint
sites. Here are some of the largest:
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